Swami Construction Vs C.C.E. & S.T. (CESTAT Ahmedabad)
The issue before the CESTAT Ahmedabad was whether the appellant was entitled to Cenvat credit on the strength of a challan evidencing payment of service tax under the reverse charge mechanism, where the service tax was deposited after the issue was pointed out by audit.
The Department contended that since the appellant had paid the service tax pursuant to the audit objection and not suo motu, credit could not be availed on the challan in view of Rule 9(1)(bb) of the Cenvat Credit Rules, 2004.
The appellant submitted that Rule 9(1)(bb) was not applicable. According to the appellant, the relevant provision was Rule 9(1)(e), which specifically covered a challan evidencing payment of service tax by the service recipient as the person liable to pay service tax. Reliance was placed on INEOS STYROLUTION INDIA LTD., Wellknown Polyester Ltd. and Pacific Harish Industries Limited.
The Tribunal noted that the appellant had paid service tax under reverse charge and had taken credit on the challans through which the service tax was paid. It held that the appellant’s eligibility for credit was based on Rule 9(1)(e), rather than Rule 9(1)(bb). Rule 9(1)(e) recognised a challan evidencing payment of service tax by the service recipient as the relevant document. TaxGuru material also records that Rule 9(1)(e) permits credit on a tax-payment challan in cases of service tax paid by a service receiver under reverse charge. ([TaxGuru][1])
